How has the introduction of Goods and Services Tax (GST) transformed the tax structure system and fiscal federalism in India?

The introduction of the Goods and Services Tax (GST) in India on July 1, 2017, has been a significant reform in the Indian tax structure. It has replaced multiple indirect taxes levied by the central and state governments with a single, unified tax system, thereby transforming the tax structure and fiscal federalism in the country. This tax reform aimed at making the tax system more efficient, reducing the cascading effect of taxes, and ensuring a seamless flow of input tax credit.

For example, earlier, a manufacturer who paid tax on raw materials could not deduct this cost from their final tax liability, leading to 'tax on tax.' However, under GST, they can claim these as input tax credits. Moreover, GST requires taxing goods and services at the point of consumption rather than production, thereby promoting equitable resource distribution among states.

For additional details, one may refer to the official Central Board of Indirect Taxes and Customs (CBIC) website, which has comprehensive resources on GST.